Netflix Switches Warner Bros. Bid to All-Cash Offer as Rival Bid and Antitrust Scrutiny Mount

Netflix has raised the stakes in its bid for Warner Bros., rewriting a blockbuster takeover agreement as an all-cash deal that intensifies a three-way struggle among Wall Street, Hollywood and antitrust regulators over the future of streaming.

Deal terms revised to cash only

On Jan. 20, Netflix and Warner Bros. Discovery Inc. said they had amended their definitive merger agreement so that Netflix will pay cash only—$27.75 per share—to acquire Warner Bros.’ film and television studio, HBO and related assets. The revised terms value the business at about $72 billion in equity and $82.7 billion including debt, unchanged from when the deal was first announced on Dec. 5.

Boards of both companies unanimously approved the new structure. Warner Bros. Discovery, based in New York, also filed a preliminary proxy statement with the Securities and Exchange Commission, setting up a shareholder vote the companies said they expect to hold by April.

The move strips out a stock component that would have given Warner Bros. Discovery investors a slice of Netflix, converting what had been a cash-and-stock package into an offer entirely in cash. Executives on both sides described the change as a way to give shareholders more certainty—and to speed up a deal already under pressure from a rival, higher-priced bid by Paramount Skydance and mounting questions in Washington and Brussels.

“Moving to an all-cash transaction delivers greater value certainty to Warner Bros. Discovery shareholders while preserving their upside in Discovery Global,” Samuel A. Di Piazza Jr., chairman of the Warner Bros. Discovery board, said in the Jan. 20 announcement.

What Netflix is—and isn’t—buying

Under the complex transaction, Netflix is not buying the entire Warner Bros. Discovery conglomerate. Instead, Warner’s movie and TV studio, HBO and HBO Max, DC Entertainment, Warner Bros. Games, Cartoon Network and related intellectual property would go to Netflix.

Warner Bros. Discovery’s global portfolio of legacy cable channels—including CNN, Discovery Channel, HGTV, Food Network, TNT, TBS and Eurosport—would be spun off into a separate publicly traded company called Discovery Global before closing.

Netflix said it would fund the acquisition with a mix of cash on hand, existing credit facilities and committed debt financing arranged by Wells Fargo, BNP Paribas and HSBC. The Los Gatos, California-based company said it expects to maintain its investment-grade credit ratings, an assurance aimed at investors wary of large, debt-fueled media mergers in recent years.

A rival bid raises the pressure

The amended agreement lands in the middle of a takeover fight for Warner Bros. Discovery. On Dec. 8, Paramount Skydance—a new entity combining Paramount Global with Skydance Media and backed by David Ellison, Oracle co-founder Larry Ellison and private equity—launched a hostile all-cash offer of $30 per share for all of Warner Bros. Discovery, including CNN and the cable networks. That bid values the whole company at more than $100 billion and would carry a significantly higher debt load.

Despite the richer headline price, Warner Bros. Discovery’s board has repeatedly urged shareholders to back the Netflix deal, calling it the “superior proposal.” In letters to investors, the board has cited concerns about Paramount Skydance’s financing structure and leverage, and highlighted the cleaner separation of Warner’s studio assets from the linear cable businesses under the Netflix plan.

The Netflix agreement is also heavily protected. Warner Bros. Discovery would owe Netflix roughly $2.8 billion if it terminates the deal in certain circumstances, while Netflix has agreed to pay a reverse termination fee of about $5.8 billion if the transaction fails under specified conditions, including some regulatory outcomes.

Antitrust review in the U.S. and Europe

Regulators in the United States and Europe are already examining the merger. The companies have filed notifications under the Hart-Scott-Rodino Act, triggering review by the Justice Department’s Antitrust Division. In Europe, the European Commission’s Directorate-General for Competition has opened its own probe.

The Justice Department will assess the deal under merger guidelines updated in 2023, which call for heightened scrutiny of concentrations above 30% in highly concentrated markets. Industry analysts estimate that a combined Netflix–Warner Bros. streaming business could control more than 40% of global subscription video-on-demand customers, and Netflix already accounts for more than half of subscription video revenues in parts of Europe.

Paramount Skydance has argued in letters to Warner Bros. Discovery shareholders that allowing the dominant global streaming service to acquire HBO and Warner Bros. would “radically increase” concentration in streaming and imperil competition. Netflix executives have countered that the market remains highly competitive, pointing to Amazon’s Prime Video, Disney+, Apple TV+, regional players and ad-supported services.

Bipartisan scrutiny and labor backlash

The merger has drawn unusual bipartisan concern in Washington.

Sen. Elizabeth Warren, a Massachusetts Democrat, has called the proposed combination “an antitrust nightmare” and warned it could give Netflix effective control over roughly half of the streaming market, claims that competition authorities are expected to test against detailed market data.

Sen. Mike Lee, a Utah Republican who chairs the Senate Judiciary Committee’s antitrust subcommittee, sent a letter to the Justice Department raising what he called “serious concerns” about the transaction and scheduled a hearing for Feb. 3. In his letter, Lee warned that a pending merger can sometimes function as a “killer non-acquisition,” allowing a larger company to access competitively sensitive information and weaken a rival even if regulators ultimately block the deal.

Sen. Tim Scott, a Republican from South Carolina, has urged the Justice Department and the Federal Trade Commission to conduct what he described as a “rigorous antitrust review,” saying the merger could “entrench monopoly power and raise prices in the streaming market.” Sen. Adam Schiff, a California Democrat, has focused on the potential impact on jobs, warning in a statement that the transaction could have “seismic impacts” on workers in Hollywood and other production hubs.

Outside government, organized labor in the entertainment industry has lined up against the deal. The Writers Guild of America East and West said in a joint statement that “the world’s largest streaming company swallowing one of its biggest competitors is exactly what antitrust laws are supposed to prevent,” arguing that fewer independent buyers for scripts and series would depress wages and narrow creative opportunity.

SAG-AFTRA and the Directors Guild of America have issued similar warnings about consolidation serving shareholders at the expense of “creative talent,” while Hollywood Teamsters have described the wave of media mergers as “greed-fueled consolidation” that threatens below-the-line jobs.

Promised synergies, and worries for theaters

Netflix and Warner Bros. Discovery have told investors that the combination would expand production, not shrink it. They say the merged company would pair Netflix’s global distribution and data-driven programming tools with Warner’s library and creative infrastructure, allowing more investment in films and series. The companies have floated synergy estimates of $2 billion to $3 billion in annual cost savings within three years of closing, largely from eliminating overlapping corporate functions, technology integration and rationalizing content spending.

Cinema owners, particularly in Europe, are also watching closely. The International Union of Cinemas, which represents European theater operators, has warned the European Commission that a Netflix takeover of Warner Bros. could lead to “significant cinema closures” by reducing the number of titles released theatrically and changing release windows. Exhibitors point to the consolidation of Disney and 21st Century Fox in 2019, after which some argue the volume of wide-release studio films declined.

Netflix has sought to allay those concerns, saying it intends to maintain “traditional theatrical norms” for major films and citing its growing use of cinema runs for selected titles. The company has not committed publicly to specific release obligations for Warner Bros. titles.

A consumer lawsuit adds another front

Consumers have started to weigh in as well. An HBO Max subscriber in Nevada filed a proposed class-action lawsuit in federal court in San Jose seeking to block the merger, alleging it would “substantially lessen competition” in violation of antitrust law, lead to higher subscription prices, degrade content quality and harm moviegoing. Class actions rarely determine the fate of large transactions on their own, but they can add pressure and provide additional factual records for regulators and courts.

What happens next

The deal would rank among the largest in media history, comparable in scale to AT&T’s acquisition of Time Warner, which ultimately led to the creation—and now breakup—of Warner Bros. Discovery, and The Walt Disney Co.’s $71 billion purchase of most of 21st Century Fox. It would also mark a turning point for Netflix, which began in 1997 as a DVD-by-mail service and spent years positioning itself as a challenger to Hollywood’s entrenched studios before emerging as the dominant global streaming platform.

Closing is far from assured. The companies say they still expect the transaction, first announced in early December, to take 12 to 18 months to complete, a timeline that assumes regulatory approvals in the U.S., Europe and other jurisdictions, as well as the successful spin-off of Discovery Global.

If regulators move to block the transaction in court, Netflix and Warner Bros. Discovery would face the choice of fighting a lengthy legal battle or walking away and triggering the multibillion-dollar reverse breakup fee. If the deal collapses, Warner Bros. Discovery—burdened by debt from its 2022 formation and still searching for a sustainable streaming strategy—could become an even more attractive target for Paramount Skydance or other suitors.

For now, Netflix’s shift to all cash has clarified one part of the equation: how much it is willing to pay, and how much risk it is prepared to take on, to bring Warner Bros. into its orbit. What remains uncertain is whether regulators in Washington and Brussels will accept a dominant streaming platform absorbing one of Hollywood’s oldest studios and HBO, or whether they will decide that, after a decade of consolidation, this is the deal that goes too far.